The grocery store issue is an example where retailer associations have received support from wholesalers on tackling a political threat. It seems to me, more often than not, the retailer and wholesaler act as allies rather than adversaries. They work to preserve productive relationships rather than threaten them.

People’s argument with the 3-tiers is mostly about the state mandated role of wholesalers, not with wholesalers per se. As you yourself describe the relationships on the ground are often strong. I’m proposing that retailers work those relationships to help open more markets for interstate shipping.

What complex relationship do you refer to between retailers and wholesalers?

The one where wholesalers support retailers in fighting against the will of the people and keep wines out of supermarkets?

I am not sure I follow that angle.

I have great respect for wholesalers. I have built many great personal relationships from my business relationships. Nevertheless, the three tiered system as we know it, is a dinosaur and is begging for improvement. Supporting a model of business that is nearly 100 years old, in this day and age, is not sensible, to me.

There is anxiety at many levels in this industry when it comes to structural change. We need to balance being entrepreneurial while minimizing the risks to our business. The regulatory environment of a state largely defines the playing field for retailers and wholesalers, and can promote risk aversion. It is a tough argument to make that a business needs to invite more competition to grow stronger. I suspect we are watching an industry resist that argument until the last possible moment.

This is an interesting and thoughtful article. But I am not surprised others felt you were defending wholesalers. So did I. I work for a California Retailer, and we have active and effective partnerships with our wholesale suppliers, both large and small. In fact, many California wineries work through them, even though they are not required to do so.

It is not a zero-sum game. But wholesalers who feel they have the right be gatekeppers and restrict consumer choice are fighting against the tide of change, IMHO. If I were Glazers and Republic, and controled 90%+ of the Texas market, I would be trying to prolong my Duopoly rents as long as possible. But that does not make it fair to the consumer who can see wines they want to buy, but not get them becuse their local wholesaler chooses not to carry them.

We are in a state where each grocery store sells wine, beer and spirits. Yet there is a vibrant panoply of family-owned businesses selling wine. I work for one such, with three stores and a website. I get very tired of hearing the parade of horribles used to keep wine from grocery stores in other states such as NY. Living in a state who made that choice did not in any way spell doom for us independent family-owned retailers.

The great thing about facing competition is that it makes you better!

This is not usually the case however in states that block the sale of wine directly to retailers or restaurants. Most distributors rely on their monopoly to maximize profits compared to work. It is much more profitable for them to sell 1,000,000 cases of a certain wine and block the sale of other wines. The result is little consumer choice and a lack of access for most wine producers in a particular market.

So, I think the question is not whether or not the opening up of markets for direct sales will actually provide a benefit to wholesalers in general, but whether or not most of the protectionist dinosaur wholesalers that are currently emptying their coffers to fight market-opening legislation would actually be competitive in an open market?

I do think that your post does a great job of encouraging deeper thought on the issue, and you are right about the 3-tier system being here to stay, at least in the short term.

Very informative and interesting post.

I see SWRA has filed for a review of the 5th Circuit decision, it seems like a long shot but it may produce a new decision for Texas.